Industry Insight | The Relationship Between Raw & Recyclable

If you are in the Manufacturing industry you have probably felt the effect of the increase in price of raw materials over the past 12 months. Whether that be paper/cardboard, steel, semi-conductors, cement & aggregates, epoxy resins or any other materials, the availability and price can cause real issues for supply chains. Is this a genuine price increase, or is this profiteering at it’s finest? Here we take a look at ways manufacturing and other businesses can help to protect themselves from increases in the price of raw materials:

Raw

As the steel price increase begins to slow, is this a sign of a return to 2019 pricing or is this expected to be the new normal? Whilst some experts predict a steady decline in pricing after Q2 due to the supply increasing to match the recent demand, others believe the new pricing is here to stay. What does this mean for your business and ultimately for your consumers? 

In such volatile markets, here are some steps you can take to help tackle ever increasing material costs:

• Shorter quote validity periods (reduced from 30 days to 14 days).
• Bulk pre-ordering of materials.
• Researching and utilising alternative materials and technology.
• Ensure you have strong supplier relationships and commit to pricing structure where possible.
• Research the market and look for any signs of impending change.
• Look for local suppliers to avoid rising import costs and taxes.
• Look at prospective/suitable buying groups. 

Raw to Recyclable

Businesses in the waste and recycling industry, like many manufacturing businesses, have been working flat out in the past 12 months, adapting to constant market changes and requirements. As consumer focus shifts further towards carbon footprint and sustainability, recycling has become an ever more prominent part of every business, which is why now, more than ever, recycling any waste material is key.

The change in consumer buying habits last year to mail order has driven a shortage of some packaging materials. As the price of raw materials has increased, so has the value of recyclable materials. If your business produces excess waste such as cardboard, plastics or metal then you could be paying to have valuable material taken away instead of receiving a rebate. Businesses investing in recycling equipment can currently see costs of £120+ per tonne for general waste removal turned into a rebate of £100+ per tonne for segregated, baled or compacted material – a difference of £220 per tonne of material!

As a result of the raw materials price increase and the subsequent increase in recyclable materials, it may currently also be financially rewarding to move towards becoming more sustainable by using material handling equipment such as compactors, balers and shredders. Ever improving available technology and innovative design have brought forward the introduction of cost effective waste handling & recycling equipment as well as specialist recycling equipment which is both cost effective and suitable for almost any waste type. 

A further incentive to invest in capital equipment to increase recycling capabilities is the tax super deduction. Businesses looking to invest in improving their waste management strategy can make the most of the current super deduction which offers 130% first-year relief on qualifying main rate plant and machinery investments until 31 March 2023. 

Looking forward to the rest of 2021 and further ahead there are many challenges we are yet to face, the price of raw materials is certainly fragile but we should almost certainly remain optimistic. By showing adaptability, aptitude, innovation, ambition and resilience the UK manufacturing industry has seen a real resurgence and growth, highlighted by the PMI recently being recorded at its highest level since 1994.